16th Oct 2006 12:56
Dwyka Diamonds Limited16 October 2006 Dwyka Diamonds Limited ('Dwyka' or 'the Company') Quarterly Report 30 September 2006 HIGHLIGHTS - Dwyka announces proposed move to 70% ownership of De Beers Tailings JointVenture as part of BEE restructure - De Beers Tailings Retreatment (DBTR) plant performance continued to improve - Diamond production 2 438 carats - 1 883 carats rough diamond stock on hand at quarter end - R7.2 million Industrial Division sales AFRICAN OPERATIONS Production DBTR - De Beers Diamond Tailings Retreatment Project - RSA Following the first ore being processed in April 2006, commercial recovery ofdiamonds commenced in this quarter. Throughput increased progressivelythroughout the period and first revenue payments were received from De Beers. Under the terms of Dwyka's agreement with De Beers, Dwyka is paid a fixed amountto treat the material on a contract basis. Thus, Dwyka's exposure to operatingcosts at designed throughput is minimal. Dwyka shares the diamond revenue - lessoperating costs - with De Beers. The project is a joint venture between Dwyka's wholly owned subsidiary SupermixMining (Pty) Ltd ('Supermix'), and Black Economic Empowerment ('BEE') entityKolong Investment Holdings (Pty) Ltd ('Kolong'). Dwyka has an effective 40 percent interest in the joint venture vehicle, Superkolong (Pty) Limited. Theproject will be supplied with tailings from De Beers Consolidated MinesLimited's Kimberley mines. Nooitgedacht Alluvial Diamond Mine - RSA During the quarter, 35511 tonnes of gravel were treated to recover 247 carats atan average grade of 0.7 carats per hundred tonnes ('cpht'). Diamonds on handfrom Nooitgedacht at period end totalled 180 carats. Newlands Kimberlite Mine - RSA During the quarter, 8572 tonnes of kimberlite were treated to recover 1006carats at an average grade of 12 cpht. A number of large stones were recovered,among them stones of the following sizes: 3.88, 3.23, 3.01, 3.88, 3.16, 3.10,4.73, 4.85, 3.48, 3.08 carats. 3983 tons of tailings were treated to recover 321carats at an average grade of 8 cpht. Diamonds on hand from Newlands at period end totalled 785 carats. Blaauwbosch Kimberlite Mine - RSA Development continued in preparation for stoping that will commence in the nextquarter. 2467 tonnes of kimberlite development material was treated to recover397 carats at an average grade of 16 cpht. This grade is expected to increaseonce processing of development material is completed and only undiluted ore isprocessed. A number of large stones were recovered, among them stones of thefollowing sizes: 3.04, 3.38, 9.68, 3.65, 4.27, 5.81, 5.25, 3.49, and 3.37carats. 19320 tonnes of tailings were treated to recover 885 carats at an average gradeof 4.58 cpht. A number of large stones were recovered, among them stones of thefollowing sizes: 4.27 and 4.12 carats. Diamonds on hand from Blaauwbosch at period end totalled 918 carats. Industrial Division - RSA Dwyka's Industrial Division achieved combined concrete and brick sales of R7.2million for the September quarter. Rising demand for bricks has resulted in theimplementation of two shift operations of the brick plant subsequent to the endof the quarter. EXPLORATION AND DEVELOPMENT Bosele Exploration - RSA On 29 June 2006, Dwyka announced that it would fast-track its prospective Boseleexploration project. Further ground based surveys have been completed inpreparation for drilling. Previous drilling by Dwyka revealed that the volcanoclastic sediments fillingthe crater exceed a vertical thickness of 200 metres; however, none of the holesdrilled penetrated the base of the sedimentary sequence. Bulk sampling of thesandy sediments in the upper part of the sequence showed them to bediamondiferous. Mahene and Itanana Kimberlites - Tanzania (JV with De Beers) Dwyka's second joint venture with De Beers involves assessment of thediamondiferous Mahene and Itanana kimberlite pipes in the Nzega District ofTanzania. Under the terms of its agreement with De Beers, Dwyka will bulk-sample thepipes, at a cost of about US$1.5 million. Dwyka's Tanzanian partner, ThorntreeMinerals Limited ('Thorntree'), is assisting with logistical, managerial andgovernment liaison support within Tanzania. Thorntree has the right toparticipate in 20 per cent of Dwyka's equity interest in these projects once thedecision to progress to feasibility study is made, but will have to fund itsshare of costs to maintain its equity position. De Beers has the option to acquire a 51 per cent shareholding in Dwyka TanzaniaLimited, the Dwyka subsidiary holding the project, by reimbursing Dwyka threetimes the costs incurred by Dwyka to evaluate the projects. Alternatively, DeBeers can elect to remain a 5 per cent shareholder in Dwyka Tanzania Limited orconvert its shareholding into a 1.5 per cent gross royalty payable on diamondrevenues. As part of this agreement, Dwyka Tanzania will sell all diamondsrecovered in the licence areas to De Beers. New Elands Kimberlite Mine - RSA Dwyka has engaged contractors to process tailings from historic operation of theNew Elands mine. Dewatering of the old workings has commenced. The water pumpedfrom the underground workings will be used in the De Beers Tailings RetreatmentProject (DBTR). Indian Exploration Laboratory testing of all outstanding samples collected during the 2006 Indianfield campaign was completed during the quarter. This programme completed theformal obligations under the terms of the BHP Billiton Framework Agreement andhas resulted in two areas which will be assessed for further exploration. Lessprospective ground will be relinquished. CORPORATE Dwyka to move to 70% of De Beers Tailings Joint Venture as part of BEErestructure On 26 July 2006 the company announced that it would move to 70% ownership of theDe Beers Tailings joint venture, under the terms of a letter agreement withKolong. The restructure of Dwyka's South African investments will result inKolong controlling a 30% interest in each of the Company's underground mines,the Nooitgedacht Alluvial Mine, the Industrial Division and the Tailings jointventure, with Dwyka controlling 70%. Under the terms of the letter agreement, which is being documented more fully ina formal share sale agreement: - Kolong's existing 60% interest in the De Beers Tailings re-treatment projectwill be reduced to 30%; - the existing 30% BEE interest in each of the Bosele Exploration Project andthe Kimberley-based bricks business operated by Dwyka's subsidiary Biz Afrika546 (Pty) Ltd, will remain; - Kolong will acquire a 30% interest in each of the Kimberley-based cementbusiness operated by Dwyka's wholly-owned subsidiary Supermix Mining (Pty) Ltd,the Nooitgedacht Alluvial Mine and the Blaauwbosch, Newlands and New Elandsunderground diamond mines; and - Kolong will be paid a one-off cash payment of R2, 000,000. The restructure will be effected through the creation of a South Africansubsidiary company which will be owned 70% by Dwyka and 30% by Kolong. Alloperations will then be owned 100% by this entity. The restructure which is scheduled for completion in the December quarter willresult in Dwyka being fully compliant with the South African BEE legislation. ADRIAN GRIFFIN Chief Executive Officer The technical exploration and mining information contained in this report wascompiled by Adrian Griffin (CEO of Dwyka Diamonds), who is a member of theAustralasian Institute of Mining and Metallurgy and is considered to be aCompetent Person in his respective area of expertise pursuant to theAustralasian Code for Reporting of Mineral Resources and Ore Reserves. For further information please contact: Adrian Griffin Dwyka Diamonds Limited +61 (0) 8 9324 2955 Richard Brown Ambrian Partners Limited +44 (0) 20 7776 6417 Laurence Read/ Leesa Peters Conduit PR +44 (0) 20 7429 6605/ +44 (0) 20 7979 955 923 Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98 Name of entityDWYKA DIAMONDS LIMITED ACN or ARBN Quarter ended ("current quarter")098 060 938 552 30 September 2006 CONSOLIDATED STATEMENT OF CASH FLOWS Cash flows related to operating activities Current quarter Year to date $A'000 (3 months) $A'0001.1 Receipts from product sales and related 1,799 1,799 debtors 1.2 Payments for (a) exploration and evaluation (192) (192) (b) development (759) (759) (c) production (2,601) (2,601) (d) administration (552) (552)1.3 Dividends received1.4 Interest and other items of a similar 57 57 nature received1.5 Interest and other costs of finance paid1.6 Income taxes paid1.7 Other FOREX variance 349 349 Net Operating Cash Flows (1,899) (1,899) Cash flows related to investing activities1.8 Payment for purchases of: (a) prospects (b)equity investments (c) other fixed assets1.9 Proceeds from sale of: (a)prospects (b)equity investments 5 5 (c)other fixed assets1.10 Loans to other entities (319) (319)1.11 Loans repaid by other entities1.12 Other Net investing cash flows (314) (314)1.13 Total operating and investing cash flows (2,213) (2,213) (carried forward)1.13 Total operating and investing cash flows (2,213) (2,213) (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc.1.15 Proceeds from sale of forfeited shares1.16 Proceeds from borrowings 56 561.17 Repayment of borrowings (46) (46)1.18 Dividends paid1.19 Other - capital raising costs Net financing cash flows 10 10 Net increase (decrease) in cash held (2,203) (2,203) 1.20 Cash at beginning of quarter/year to date 6,286 6,2861.21 Exchange rate adjustments to item 1.20 (4) (4)1.22 Cash at end of quarter 4,079 4,079 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 168 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest - Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used $A'000 $A'0003.1 Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A'0004.1 Exploration and evaluation 1004.2 Development 400 Total 500 Reconciliation of cash Reconciliation of cash at the end of the quarter Current quarter Previous quarter(as shown in the consolidated statement of cashflows) to the related items in the accounts is as $A'000 $A'000follows.5.1 Cash on hand and at bank 202 95.2 Deposits at call 3,877 6,2775.3 Bank overdraft5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 4,079 6,286 Changes in interests in mining tenements Tenement reference Nature of interest Interest at Interest at beginning of end of (note (2)) quarter quarter6.1 Interests in mining tenements relinquished, reduced or lapsed6.2 Interests in mining tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total number Number quoted Issue price per Amount paid up per security (see note security (see note 3) 3)7.1 Preference - - +securities (description)7.2 Changes during quarter 7.3 +Ordinary 92,737,135 92,737,135 N/A N/A securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs7.5 +Convertible 1,000 GBP100 notes - 100 GBP 100 GBP debt securities convertible at (description) GBP0.36 on or before 22 June 2010 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted7.7 Options Exercise price Expiry date (description and conversion 1,100,000 - $0.52 30/6/2007 factor) 250,000 - $0.87 30/6/09 1,250,000 - $1.00 30/6/097.8 Issued during quarter7.9 Exercised during quarter7.10 Expired (cancelled) during quarter7.11 Debentures - - (totals only)7.12 Unsecured notes - - (totals only) Compliance statement 1 This statement has been prepared under accounting policies whichcomply with accounting standards as defined in the Corporations Law or otherstandards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the mattersdisclosed. 16 October 2006 Company Secretary Michael Langoulant Notes 1 This quarterly report provides a basis for informing the market how theentity's activities have been financed for the past quarter and the effect onits cash position. An entity wanting to disclose additional information isencouraged to do so, in a note or notes attached to this report. 2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect ofinterests in mining tenements acquired, exercised or lapsed during the reportingperiod. If the entity is involved in a joint venture agreement and there areconditions precedent which will change its percentage interest in a miningtenement, it should disclose the change of percentage interest and conditionsprecedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is notrequired in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for ExtractiveIndustries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of InternationalAccounting Standards for foreign entities. If the standards used do not addressa topic, the Australian standard on that topic (if any) must be complied with. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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